Yair Lapid and Israeli Austerity

Middle East Policy Council

The last few days have been particularly difficult for Israeli Prime Minister Benyamin Netanyahu, and especially so for his new finance minister (and leader of the Yesh Atid party), Mr. Yair Lapid. The former TV personality and columnist seems to have alienated much of his base after putting forward a budget that critics have decried as too burdensome for middle-income families. Mr. Lapid has also proposed cuts in military spending. For a country that has some of the highest military spending among developed countries, such a proposal has not gone down very well, especially with those who anticipate possible military action against Hezbollah and perhaps even Iran.

The criticism toward Mr. Lapid is generally divided into two camps. On one side, there are those who take issue with his failure to honor his campaign pledges of defending the middle class, and on the other there are those who feel the defense cuts undermine the Israel’s security.  Many in the former camp, including the Globe’s Stella Korin-Lieber, believe the Finance Minister has taken the easy way out: “Instead of dealing the blows where they were needed, cutting excess spending and being capable of standing by such cuts, what is known as setting priorities, Lapid chose the easy way out, and had a go at everybody….The government will remain bloated, too involved in the economy, and without any mechanism for emerging from crisis to growth. Worst of all: exactly the same people will continue to work, serve in the reserves, pay taxes only more so.”

By taking aim at the middle class and avoiding what Yedioth Ahronoth’s Ophir Falk calls ‘difficult choices,’ critics charge that Mr. Lapid has now realized that “he can’t please all of the people all of the time. That’s what happens when decision-making replaces storytelling. That’s what happens when an unaccountable columnist becomes a scrutinized finance minister that needs to submit a prioritized budget. In a budget that called for cuts, Lapid had the choice of confronting corrupt union leaders or humiliating unemployed housewives and hard working middle class. He chose the latter”

For Jerusalem Post columnist Hilik Bar, the furor surrounding the finance minister’s budget is proof of PM Benyamin Netanyahu’s skill in weakening his political opponents by presenting them with difficult choices, while simultaneously accomplishing his economic agenda: “Interestingly, there is one name that we aren’t hearing in the lead-up to the coming slash-and-burn budget, and that is Binyamin Netanyahu’s. Despite all the hype over the electoral success of Yair Lapid, the prime minister still managed to maneuver Lapid into the Finance Ministry, where Lapid alone will bear the brunt of the public’s disapproval over the coming austerity measures. Netanyahu, who more than anyone else is responsible for the Thatcherization of Israel’s economy, now has ‘Thatcher with hair gel’ to finish the job for him.”

That doesn’t mean the prime minister has escaped completely unscathed from the debacle surrounding the budget. Revelations that Mr. Netanyahu had ordered the installment of an expensive bed for his flight to England — all the while asking Israelis to tighten their belts — have exposed the prime minister to ridicule in various social forums. As Times of Israel Gavriel Fiske notes: “This week, Prime Minister Benjamin Netanyahu faced heavy criticism after it was revealed Saturday that he had spent $127,000 of taxpayer money to install a double bed on his five-hour El Al flight to England last month for Margaret Thatcher’s funeral. It wasn’t always this way, as shown by a photograph of former Prime Minister Menachem Begin — which went viral on Monday….within three hours of the photo being posted it had been shared over a thousand times and been repackaged and shared by an Israeli photo group on Facebook. Some users of the social network riffed on the original photo to bring out the absurdity of the comparison between Netanyahu and Begin.”

The new budget proposal has also drawn fire from those on the right who believe the cuts in the defense spending “could harm readiness for war…. There is deep concern within the defense community that the proposed NIS 4 billion cut to the defense budget will harm training programs, battle readiness and equipment stocks and the acquisition of military platforms….Defense officials are also concerned about the prospect of damage being caused to training programs designed to get soldiers — both reservists and conscripts — ready for battle, the need for which is one of the main lessons learned from the 2006 Second Lebanon War.”

Nevertheless, there are those who have commended Mr. Lapid for his boldness and political acumen. Hanoch Daum, for example, argues in a recent column on the Israeli daily Yedioth Ahronoth that, politically speaking, the fight over the proposed budget has been a positive for Mr. Lapid: “The budget harms the middle class as well, and we must honestly admit that a similar budget, had it been submitted with Lapid in the opposition, would have been subject to a massive attack by his Yesh Atid party…..Two months ago people questioned Lapid’s knowledge of economics, while today the discussion is about his policy and the direction he is leading the economy to. Six weeks in office, and despite the criticism over the budget, no one is asking whether Lapid can take the Finance portfolio upon himself. Lapid jumped into the stormy water, took the lousiest position at the worst possible time, and no one is claiming today — including his greatest critics — that the position is beyond his capability.”

On the security front, the new finance minister has received some support from a recent Haaretz editorial that suggests the military spending cuts send an important signal to the rest of the world about the priorities of the Israeli state, especially as it pertains to the peace talks with the Palestinians: “Are we defending a state whose hand is outstretched in peace? In other words, are we defending a state that welcomes the Arab Peace Initiative…Or are we defending a state that annexes territory unilaterally…thereby ensuring that the conflict will continue? And what quality of life does this state aspire to give the citizens, residents and aliens that reside within its borders? …National security isn’t just an army. Diplomatic agreements achieve important security goals; the economy is no less important than weaponry; and making intelligent, efficient, careful use of the budget at the defense establishment’s disposal will achieve a higher level of security at a lower cost than what we have now.”

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